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How to Safeguard Your Business Name

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Photo: © iStockphoto/Yuriy Kirsanov

Fred S. Steingold |

ANN ARBOR, Mich. — Microsoft. Starbucks. Walmart. They’re all memorable names. You can bet that those companies carefully made sure they had exclusive rights to them.

Your business name may not be as distinctive or well known. Still, you’d hate to have a judge tell you that you can’t use it anymore. And if another business copied your name, you’d like to be able to go into court and put a stop to it.

So how do you protect the name of your business or service? We’ll look at a few techniques. But, ultimately, only you and your lawyer can decide how much effort and expense to invest in name protection.

Your decision will depend on many factors, including:

  • the size of your business
  • the size of the market in which you operate
  • the type of product or service you offer
  • your expectations for growth and expansion

Generally, the more customers your business will reach, the more you need to be sure that you have the exclusive right to your chosen name. Joe who runs a local computer repair service won’t need as much name protection as Alicia who plans to sell a new line of iPad cases in all 50 states.

Obviously, the Internet is a major factor. It’s caused a rapid growth in the number of small and mid-sized businesses that compete with one another. How does this affect you? It means you may have a greater need than in the past to do in-depth name searches — and perhaps to seek trademark protection.

HOW FAR SHOULD YOU GO?

Let’s start by focusing on the simplest situation. Yours is an extremely small local business, for example, that probably needs to do nothing more than meet a few requirements of state law.

Example: Jeff wants to start a local photography studio called “Portraits by Jeff.” He’ll be a sole proprietor. Since his is a small, unincorporated local business, he’s probably safe enough if he just registers his business name at the county level. (Some states require registration at the state level – and publishing the name in a newspaper.) Jeff probably doesn’t need to spend time and money to register the name as a trademark or service mark. He should, however, check to be sure there are no other photographic studios in his area using the same or a similar name.

If Jeff decides to incorporate his little business or form a limited liability company, he’ll need to make sure the business name contains the right additions (such as Inc. or LLC). He’ll also need to be sure the name doesn’t conflict with that of other corporations or LLCs in his state. The corporate filing office can probably check this out for Jeff in advance. The cost, if any, will be minimal.

But be aware of this important fact: having the state accept your corporate or LLC name doesn’t give you the protection of a trademark.

Still, in most cases, if you have a small local business that uses your name or an extremely common name to market goods and services locally, you can pretty safely ignore trademark concerns. So if you call your business Harvey Walker Roof Repair, you’re not likely to have a trademark problem.

But if your business is bigger—such as a large camping equipment store, Wilderness Outfitters—or sells goods or services beyond a local or industry-specific niche—Lamps.com Online Lamp Store, for example—I recommend that you look into trademark protection. Here’s why.

You don’t want to buy signs, stationery and ads and then get a nasty letter from a large company that claims a right to the name you’re using and threatens you with a trademark infringement lawsuit.

Just defending such a case in federal court can cost you upward of $100,000. Even if you’re sure that you’re in the legal right, you’ll probably wind up changing your business name just to duck the lawsuit.

MAXIMUM PROTECTION

If name protection is important to your business, you’ll get the maximum protection by obtaining a trademark if you sell a product—or by getting a service mark if you sell a service.

A trademark is a word, phrase, design or symbol that identifies a product brand. Examples are Dell computers, Nike shoes, Kodak cameras and Marathon gasoline.

A service mark is a word, phrase, design or symbol that identifies the provider of a service.  Examples include Burger King (fast foods), Roto-Rooter (sewer-drain service), Kinko’s (copy centers) and Hertz (car rentals).

To properly register a trademark or service mark, you’ll probably need help from a lawyer who specializes in intellectual property law. But if you’re a do-it-yourself type, you can save money by doing some of the preliminary work, including conducting a search of existing names that have been registered. For guidance on how to do this, read Trademark: Legal Care for Your Business & Product Name, by Richard Stim and Stephen Elias.

From a legal protection standpoint, the best trademarks are coined words, such as Kodak or Yuban. Or try for an arbitrary word—such as Arrow for shirts or Apple for computers—that has nothing to do with the product. Nearly as good are suggestive trademarks, ones that hint at some aspect of the product. For example, Talon suggests the gripping power of a zipper.

Even if you don’t seek full-fledged trademark protection, it helps to conduct a national name search. That way, you’ll avoid stepping on someone’s toes. Professional search firms typically charge between $150 and $300 for each name searched.

 

Legal strategies may vary depending on the state in which you live and the specifics of your situation. Consult your attorney for legal advice.

About the author

Fred S. Steingold

Hamilton, Judge, Schroer & Steingold, PLC

Attorney

 

Fred S. Steingold practices law in Ann Arbor, Mich., for the firm of Hamilton, Judge, Schroer & Steingold, PLC. He is the author of The Legal Guide for Starting and Running a Small Business and The Employer's Legal Handbook, published by Nolo Press.

 

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